Fiber in Europe Top5: Germany and the UK are lagging behind, but taking action

Fiber is increasingly taking root in the five largest European markets. Since the first quarter of 2021, 1.8 million broadband FTTx subscriptions have been taken on average each quarter to reach more than 37 million subscriptions across 146 million households at Q2 2022 in those five countries. The technology has disrupted the broadband market. Numerous private investors and investment funds have invested massively in the construction or acquisition of networks in parallel with state subsidies, which are more or less significant depending on the country. This large flow of money has enabled a fast transformation of the legacy infrastructure and rapidly increased subscriptions to high speed broadband in some countries. Disparities remain in the number of subscribers, directly correlated to the progress of this rollout. While Spain, France and Italy combine together more than 119 million premises passed with fiber, the UK and Germany have respectively connected 17.8 and 8.2 million premises at Q2 2022. The latter countries’ lag is explained by the legacy of a highly developed cable and copper network on which incumbents preferred to capitalize rather than run fiber optic cables for billions of euros. Thus, leading local telcos have focused on improving their existing networks by switching copper lines to super vectorial or upgrading cable lines to DOCSIS 3.1 technology over the last years. Market dominance by the incumbents and lack of regulation in favour of open access networks has also maintained the status quo in Germany and the UK: Deutsche Telekom and cable operator Vodafone held 56.5% of total broadband subscriptions at the end of 2012 and the oligopoly in the UK between BT, Sky and cable operator Virgin Media represented 70% of broadband subscriptions at the same period. Nevertheless, both countries recently started their migration toward FTTx technologies, especially the UK at high pace. While the rhythm of fiber rollout is starting to slow for Spain, France and Italy as mostly rural areas remain to be connected, the UK rollout is proceeding at full speed as can be seen below, with very dynamic construction projects in large cities and dense areas, often focusing on multi-dwelling units. At Q2 2022, the UK accounted for almost one third of new FTTP premises passed quarter over quarter in those five markets. This catch-up effect is being driven primarily by BT's wholesale division Openreach which accounted for almost 45% of FTTP connections; but also by a number of smaller players supported mainly by private equity funds. For instance, CityFibre, which is backed by Antin Infrastructure Partners and Goldman Sachs, just raised a further £1.4 billion to fund its fiber rollout. However, this dispersed progress raises the question of the financial sustainability of this rapid deployment: the number of...